April 16, 2014
Columbus-based footwear and accessories retailer DSW has gained a foothold north of the border.
DSW announced yesterday that it has paid $62 million for a 44 percent interest in Town Shoes Limited of Canada, with an option to buy the rest of the company in a few years.
The purchase fulfills a long-held ambition to enter the Canadian market, said Mike MacDonald, DSW president and CEO.
“We have looked at Canadian entry options for some time and decided to acquire an existing operation with a long track record of success and to use this operation as a base from which we can establish the DSW brand in Canada,” MacDonald said in a statement.
The transaction has been approved by both companies’ boards and is expected to close in May.
Town Shoes is Canada’s largest footwear and accessories retailer, with sales of $264 million in its most-recent fiscal year. The retailer operates 182 locations across Canada, primarily under the Shoe Company, Shoe Warehouse and Town Shoes banners.
DSW operates more than 400 DSW stores in 42 states and supplies footwear to more than 350 other retailers.
Town Shoes’ chains, especially Shoe Warehouse, are similar in style to DSW’s warehouse-style stores featuring a broad array of brands.
The Canadian company is mainly owned by Alberta Investment Management Corp. and Canadian private-equity firm Callisto Capital.
As part of the deal, DSW can buy additional shares from other minority shareholders. It also has the right to purchase the balance of Town Shoes from other shareholders, including Callisto Capital, after four years. Callisto Capital has the right to sell the balance of the company to DSW after three years.
DSW’s initial stake provides 50 percent voting control and board representation, equal to that of Callisto.
Callisto Capital is “thrilled” that DSW “will be joining us as our strategic partner as we roll out DSW stores across the country,” said Lawrence Stevenson, managing director of the private-equity firm, in a statement.